The chief executive of the London Stock Exchange has warned the UK's vote to leave the EU poses a risk to the global financial system and could cost the City of London up to 10,000 jobs if the Government fails to provide a clear plan for post-Brexit operations.
Speaking to MPs on the Treasury Select Committee, Xavier Rolet said LSE customers simply “would not wait” for clarity over Britain’s divorce from the EU before moving.
He said: “I’m not just talking about the clearing jobs themselves which number into the few thousands.But the very large array of ancillary functions, whether it’s syndication, trading, treasury management, middle office, back office, risk management, software, which range into far more than just a few thousand or tens of thousands. They would then start migrating.”
A private report from EY, commissioned by the London Stock Exchange and seen by the Financial Times in November, estimated that more than 200,000 UK jobs could be at stake, if ministers failed to agree on a transitional deal on single market access with the EU.
His comments came as Douglas Flint, the chairman of HSBC who is also giving evidence to the Treasury Select Committee, said more clarity is needed on Brexit negotiations to prevent companies including his own firm from moving thousands of jobs out of London.
He said banks did not want to move operations outside London but they had to plan for the worst.
Ahead of the EU referendum in June, HSBC said it could move 1,000 roles to its operations in Paris.
Mr Flint confirmed on Tuesday that the same number of roles was still at risk and that HSBC was ready to take “pre-emptive action”, pointing out that the bank also had operations in Ireland and the Netherlands.
He compared the London’s financial system to a “Jenga tower”.
He said: “You don’t know what will happen if you pull one small piece out — it might have a big impact."
Together with Elizabeth Corley, of Allianz Global Investors, who was also speaking in front of the committee, the three City bosses all called for clarity on “transition arrangement" in the next eight to 12 weeks.
"I think there is a way to turn this process into a positive for both [the UK and the European] economies," Mr Rolet said, adding however that a period of stability is essential.
City companies fear that a hard Brexit will result in the UK leaving Europe’s single market which could signal the loss of crucial passporting rights, that currently allow them to sell their services freely across the rest of the EU and give firms based in Europe unfettered access to Britain.
Companies are pressing Britain and the EU to agree on a transition deal that would keep many of the current arrangements for up to five years, helping to cushion them from the effects of Brexit.
A cross-party group of peers, in December, said Britain's financial sector must be offered a "Brexit bridge" to prevent companies moving to rival locations such as New York, Dublin, Frankfurt or Paris.
However, on Sunday, Prime Minister Theresa May said Britain cannot expect to hold on to “bits” of its membership with the EU after Brexit, suggesting The UK is heading towards a hard Brexit.
The pound fell to a 10-week low following Ms May’s interview.
